Why Wal-Mart Is Saying “No” to Mobile-Payment Providers, And Why Your Business Should Say “Yes”

Merchants are always looking for ways to make shopping more convenient for customers, and mobile-payment systems offer an attractive means of doing so.

Various providers, including GoPayment, have sprung up in recent years to help businesses process mobile transactions. Proponents are calling these providers the “wave of the future.” However, some retailers — most notably Wal-Mart — would rather develop their own proprietary system than tap into a third party’s technology.

Wal-Mart Exec Cites Security Concerns

The retail giant has announced that it will not seek to partner with any existing mobile-payment processing company in order to bring the technology to its stores. Mike Cook, vice president and assistant treasurer for Wal-Mart, said as much during a panel discussion at the RAMP Advanced Commerce & Mobile Retail Services Summit in October.

Cook said he doesn’t want to subject Wal-Mart to what he calls the “fraud-prone system” embraced by mobile-payment companies. He declined to elaborate on his security concerns. However, some consumers worry that their personal data could be comprised or that losing a smartphone or an RFID credit card would enable a criminal to easily access their account(s).

Wal-Mart Is Developing Another System

Wal-Mart isn’t abandoning the concept of mobile payments. Instead, the retailer has joined other big companies to form the Merchant Customer Exchange. The consortium’s goal is to create and implement a mobile-payment platform that would be used by all member retailers, including Bed Bath & Beyond, Best Buy, Dillard’s, Dunkin’ Brands, Gap, 7-Eleven, and Target. It remains to be seen when (or if) the MCX platform will be rolled out and whether it works well.

In the meantime, smaller businesses can continue to take advantage of the mobile-payment systems that are available now. These platforms are secure, easy to install, affordable, and simple for customers to use.

And most importantly, at least for the time being, they offer independent merchants a competitive advantage over mega-retailers like Wal-Mart.